Realtime Adaptive Streaming v. Netflix, Inc.

Case: 21-1484 Document: 76 Page: 1 Filed: 07/27/2022
United States Court of Appeals
for the Federal Circuit
______________________
REALTIME ADAPTIVE STREAMING LLC,
Plaintiff-Appellant
v.
NETFLIX, INC., NETFLIX STREAMING SERVICES,
INC.,
Defendants-Cross-Appellants
______________________
2021-1484, 2021-1485, 2021-1518, 2021-1519
______________________
Appeals from the United States District Court for the
Central District of California in Nos. 2:19-cv-06359-GW-
JC, 2:19-cv-06361-GW-JC, Judge George H. Wu.
______________________
Decided: July 27, 2022
______________________
PHILIP WANG, Russ August & Kabat, Los Angeles, CA,
argued for plaintiff-appellant. Also represented by REZA
MIRZAIE, SHANI M. WILLIAMS.
TODD RICHARD GREGORIAN, Fenwick & West, LLP, San
Francisco, CA, argued for defendants-cross-appellants.
Also represented by J. DAVID HADDEN, SAINA S. SHAMILOV,
Mountain View, CA.
______________________
Before NEWMAN, REYNA, and CHEN, Circuit Judges.
Case: 21-1484 Document: 76 Page: 2 Filed: 07/27/2022
2 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
Opinion for the Court filed by Circuit Judge CHEN.
Opinion concurring-in-part, dissenting-in-part filed by
Circuit Judge REYNA.
CHEN, Circuit Judge.
Plaintiff-Appellant Realtime Adaptive Streaming LLC
(Realtime) filed three separate patent infringement actions
against Defendants-Cross-Appellants Netflix, Inc. and
Netflix Streaming Services, Inc. (collectively, Netflix).
Realtime first asserted six patents in the District of Dela-
ware. While the Delaware action was ongoing, Netflix filed
seven petitions for inter partes review before the Patent
Trial and Appeal Board seeking a determination that many
of the claims asserted in the Delaware action were un-
patentable. Netflix also moved to dismiss the complaint for
failure to state a claim, arguing that four of the six asserted
patents were ineligible under 35 U.S.C. § 101. Netflix fully
briefed, and Realtime full responded to, those patent-ineli-
gibility theories. Following institution of all seven inter
partes review proceedings and a thorough report and rec-
ommendation from the Delaware magistrate judge finding
claims of four of the patents ineligible under § 101,
Realtime voluntarily dismissed the Delaware action—be-
fore the district court could rule on the magistrate judge’s
ineligibility findings.
Although Realtime was done with Delaware, it was not
done with Netflix. The next day, Realtime started fresh,
re-asserting the same six patents against Netflix, this time
in the Central District of California—despite having previ-
ously informed the Delaware court that transferring the
Delaware action across the country to the Northern Dis-
trict of California would be inconvenient and an unfair bur-
den on Realtime. Netflix then simultaneously moved for
attorneys’ fees and to transfer the California actions back
to Delaware. Prior to a decision on either motion, Realtime
again avoided any court ruling by voluntarily dismissing
its case.
Case: 21-1484 Document: 76 Page: 3 Filed: 07/27/2022
REALTIME ADAPTIVE STREAMING v. NETFLIX, INC. 3
Netflix then renewed its motion for attorneys’ fees for
the California actions as well as the related Delaware ac-
tion and inter partes review proceedings. The district court
awarded fees for both California actions pursuant to § 285
and, in the alternative, the court’s inherent equitable pow-
ers. The district court declined to award fees for the related
Delaware action or inter partes review proceedings under
either § 285 or Federal Rule of Civil Procedure 41(d). 1
Realtime now appeals the court’s fee award for the Califor-
nia actions and Netflix cross-appeals the court’s denial of
fees for the related proceedings. Because we hold that the
district court did not abuse its discretion in awarding fees
pursuant to its inherent equitable powers or in denying
fees for the related proceedings, we affirm. We need not
reach the question of whether the award also satisfies the
requirements of § 285. 2
1 The parties dispute whether Rule 41(d) permits a
district court to award attorneys’ fees. However, as we ex-
plain below, because we affirm the district court’s decision
to not award fees for the non-California proceedings, we
need not decide the issue.
2 Section 285 permits a court to award attorneys’
fees in “exceptional cases” to “the prevailing party.” On ap-
peal, Realtime challenges whether its two voluntary dis-
missals rendered Netflix a prevailing party. But we need
not resolve that question here. A district court may rely on
its inherent equitable powers to award attorneys’ fees even
if there is a statutory provision creating an alternative ve-
hicle. Chambers v. NASCO, Inc., 501 U.S. 32, 46 (1991)
(“We discern no basis for holding that the sanctioning
scheme of the statute and the rules displaces the inherent
power to impose sanctions for the bad-faith conduct de-
scribed above.”); id. at 49 (“The Court’s prior cases have in-
dicated that the inherent power of a court can be invoked
even if procedural rules exist which sanction the same
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4 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
I
The parties have been adverse in three district court
actions and seven inter partes review proceedings involving
the same six patents and the same accused products.
The events leading to the award of attorneys’ fees at
issue began on November 21, 2017, when Realtime filed a
patent infringement action against Netflix in the District
of Delaware. J.A. 3672–3742. In the Delaware action,
Realtime asserted six patents: U.S. Patent Nos. 7,386,046
(’046 patent); 8,634,462 (’462 patent); 8,934,535 (’535 pa-
tent); 9,578,298 (’298 patent); 9,762,907 (’907 patent); and
9,769,477 (’477 patent). J.A. 3674. The ’462 patent later
reissued as U.S. Patent No. RE46,777 (’777 patent).
J.A. 354. In response, Netflix moved to dismiss the com-
plaint, arguing not only that Realtime failed to sufficiently
plead direct, contributory, and induced infringement, but
also that four of the six patents were ineligible under
35 U.S.C § 101. 3 J.A. 816. While the motion to dismiss was
pending, Netflix moved to transfer the case to the Northern
District of California for convenience and Realtime op-
posed. In its opposition brief, Realtime vehemently argued
that it lacked any ties to California and that moving the
case to California would “lead to greater expense, addi-
tional travel, and more work for Realtime,” leading to an
conduct.”); see also Miller v. Cardinale, 361 F.3d 539, 551
(9th Cir. 2004) (footnote omitted) (“The Supreme Court has
emphatically rejected the notion that the advent of
28 U.S.C. § 1927 and the sanctioning provisions in the Fed-
eral Rules of Civil Procedure displaced the inherent power
to impose sanctions for bad faith conduct.” (citing Cham-
bers, 501 U.S. at 49–50)).
3 Netflix identified the ’535, ’477, ’907, and ’046 pa-
tents as ineligible under § 101.
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REALTIME ADAPTIVE STREAMING v. NETFLIX, INC. 5
“unfair” burden on Realtime. J.A. 3813–14; J.A. 3817. The
Delaware court denied the motion to transfer. J.A. 612.
Then, on December 12, 2018, the Delaware magistrate
judge, after full briefing by the parties, issued a detailed
report and recommendation advising the court to find the
four patents challenged under § 101 to be ineligible.
J.A. 975–85. In that report, the magistrate judge sepa-
rately analyzed representative claims from each of the four
challenged patents under the two-step framework set forth
by the Supreme Court. The magistrate judge considered
both parties’ arguments and compared the challenged
claims to this court’s precedent, setting forth a thorough,
fully reasoned analysis for why the asserted claims were
directed to an ineligible abstract idea. J.A. 968–85.
Realtime subsequently moved to amend its complaint.
J.A. 3961–74. In that motion, Realtime pointed to its re-
lated patents that purportedly showed “various technolo-
gists were still struggling to solve” the problem identified
in the asserted patents. J.A. 3968. However, in parallel
actions involving different defendants, the same district
court judge invalidated all of those related patents, finding
them to be directed to ineligible subject matter.
J.A. 3995–96. The same order from the parallel actions
also denied Realtime’s earlier motions to amend its com-
plaints “for futility.” J.A. 3996.
If the mounting threat of ineligibility for four of the pa-
tents were not enough, beginning from January to May of
2019, the Patent Trial and Appeal Board began instituting
inter partes review proceedings for all six of the asserted
patents on a rolling basis. J.A. 6005–33 (instituting inter
partes review for the ’535 patent); J.A. 6061–6106 (for the
’298 patent); J.A. 6034–60 (for the ’777 patent); J.A. 6106–
43 (for the ’477 patent); J.A. 5874–5907 (for the ’907 pa-
tent); J.A. 5908–68 (for the ’477 patent);
J.A. 5969–6004 (for the ’046 patent).
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6 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
By little coincidence, on July 22, 2019, right after the
district court found Realtime’s related patents in the par-
allel actions to be ineligible under § 101, but before the
same district court could rule on the magistrate judge’s in-
eligibility recommendation for these patents, Realtime vol-
untarily dismissed its Delaware action. J.A. 4000.
For most plaintiffs, these circumstances would signal
the end of litigation. Realtime, however, rebooted the liti-
gation against Netflix in the form of two new patent in-
fringement actions in the Central District of California—a
forum that by that time had already reached a more favor-
able conclusion on patent-eligibility for some of the claims.
Realtime Adaptive Streaming LLC v. Netflix, Inc., No. 2:19-
cv-06359, 2020 WL 8024356, at *7 (C.D. Cal. Nov. 23, 2020)
(Fees Award); see also Realtime Adaptive Streaming LLC v.
Google LLC, No. 2:18-cv-03629 (C.D. Cal. Oct. 25, 2018),
Dkt. No. 36. The first complaint asserted the ’298 patent
and the ’777 reissue of the ’462 patent, J.A. 55, and the sec-
ond complaint asserted the four patents the Delaware mag-
istrate judge recommended finding ineligible under § 101,
J.A. 108. In effect, Realtime divided the Delaware action
in two—asserting the same patents, but sequestering the
patents known to be vulnerable under § 101. By heading
to California, Realtime dodged the adverse magistrate rec-
ommendation under consideration by the district court
judge who had already found five related patents to be in-
eligible.
Shortly thereafter, Netflix simultaneously moved to
transfer both California actions back to Delaware and for
attorneys’ fees. J.A. 38; J.A. 46–47. Realtime again op-
posed the transfer, this time arguing that California was
more convenient than Delaware despite: (1) the Delaware
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REALTIME ADAPTIVE STREAMING v. NETFLIX, INC. 7
court’s experience with most of the asserted patents, 4
(2) Realtime’s original selection of that forum, and
(3) Realtime’s earlier protests in the Delaware action that
a transfer to California would be an unfair burden. See,
e.g., J.A. 3365. Following briefing on the motion to transfer
(and the day before oral argument on that motion), but be-
fore the parties fully briefed the fees motion, Realtime vol-
untarily dismissed both California actions. J.A. 3615;
J.A. 3618. At the time of the dismissals, the California
court had not yet made any substantive determinations.
After this second round of voluntary dismissals, Netflix
renewed its motion for attorneys’ fees for: (1) the Califor-
nia actions, (2) the original Delaware action, and (3) the re-
lated inter partes review proceedings. J.A. 3620–70;
J.A. 4881–83. The California court awarded fees for the
California actions but declined to award fees for the related
Delaware and inter partes review proceedings. Fees Award
at *10. In particular, the court concluded that Realtime’s
litigation conduct justified awarding fees for the California
actions under either § 285 or the court’s inherent equitable
powers. Id. at *11. For the related actions, the court con-
cluded that an award of fees was not warranted under ei-
ther § 285 or Rule 41(d). Id. at *10.
This appeal and cross-appeal followed. We have juris-
diction under 28 U.S.C. § 1295(a)(1).
II
A district court “may award attorneys’ fees when the
interests of justice so require.” Hall v. Cole, 412 U.S. 1, 4–5
(1973). The Supreme Court has repeatedly recognized the
propriety of such an award when a party has “acted in bad
faith, vexatiously, wantonly, or for oppressive reasons.”
4 On September 20, 2019, Realtime added previ-
ously-unasserted U.S. Patent No. 8,054,879 to one of the
California actions.
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8 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
Chambers, 501 U.S. at 45–46 (quoting Alyeska Pipeline
Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 258–59 (1975));
see also Roadway Express, Inc. v. Piper, 447 U.S. 752, 766
(1980). Because a district court’s inherent power to impose
sanctions in the form of attorneys’ fees is not a substantive
patent question, we apply the law of the regional circuit,
here, the Ninth Circuit. AntiCancer, Inc. v. Pfizer, Inc., 769
F.3d 1323, 1328 (Fed. Cir. 2014). Under Ninth Circuit
precedent, the court must find that the sanctioned behavior
“constituted or was tantamount to bad faith.” Haeger v.
Goodyear Tire & Rubber Co., 793 F.3d 1122, 1132 (9th Cir.
2015) (quoting Leon v. IDX Sys. Corp., 464 F.3d 951, 961
(9th Cir. 2006)), rev’d on other grounds, 137 S. Ct. 1178(2017). A determination that a party has engaged in “will-
ful actions” with “an improper purpose” can satisfy the bad
faith requirement. Fink v. Gomez, 239 F.3d 989, 993–94
(9th Cir. 2001). Such actions include “a full range of litiga-
tion abuses,” such as “delaying or disrupting the litigation,”
Haeger, 793 F.3d at 1133 (first quoting Chambers, 501 U.S.
at 47; and then Primus Auto. Fin. Servs., Inc. v. Batarse,
115 F.3d 644, 648 (9th Cir. 1997)), and can include actions
consisting of “making a truthful statement or a non-frivo-
lous argument or objection” for an improper purpose, Fink,
239 F.3d at 992. However, a finding that a party engaged
in bad faith conduct does not compel the imposition of sanc-
tions, which “is within the sound discretion of the district
court.” Haeger, 793 F.3d at 1131 (quoting Lasar v. Ford
Motor Co., 399 F.3d 1101, 1109 (9th Cir. 2005)).
We also apply Ninth Circuit law to an award or denial
of “costs” pursuant to Rule 41(d). See Shum v. Intel Corp.,
629 F.3d 1360, 1370 (Fed. Cir. 2010) (citing Manildra Mill-
ing Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1184
(Fed. Cir. 1996)). Under Rule 41(d) a district court “may”
award costs “if a plaintiff who previously dismissed an ac-
tion in any court files an action based on or including the
same claim against the same defendant.”
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REALTIME ADAPTIVE STREAMING v. NETFLIX, INC. 9
Federal Circuit precedent applies to a district court’s
decision to award fees pursuant to § 285. Blackbird Tech
LLC v. Health in Motion LLC, 944 F.3d 910, 914 (Fed. Cir.
2019) (“We apply Federal Circuit case[]law to the § 285
analysis, as it is unique to patent law.” (quoting Digeo, Inc.
v. Audible, Inc., 505 F.3d 1362, 1366 (Fed. Cir. 2007))). Un-
der § 285, a district court “may award” attorneys’ fees to
“the prevailing party” in “exceptional cases.”
Both the Ninth Circuit and this court review a district
court’s decision regarding whether to award fees for abuse
of discretion. Haeger, 793 F.3d at 1130 (reviewing a district
court’s award of attorneys’ fees pursuant to its inherent
powers for abuse of discretion); Arunachalam v. IBM, 989
F.3d 988, 996 (Fed. Cir. 2021) (same); Blackbird Tech, 944
F.3d at 914 (reviewing a district court’s award of attorneys’
fees pursuant to § 285 for abuse of discretion); cf. Draper v.
Rosario, 836 F.3d 1072, 1087 (9th Cir. 2016) (reviewing a
district court’s award of costs pursuant to Federal Rule of
Civil Procedure 54(d)(1) for abuse of discretion).
Accordingly, we will not overturn the district court’s
decision regarding whether to award attorneys’ fees “un-
less the court committed an error of law or the court’s fac-
tual determinations were clearly erroneous.” Lasar,
399 F.3d at 1109; see also Blackbird Tech, 944 F.3d at 914.
III
A
The district court awarded Netflix attorneys’ fees for
both California actions pursuant to its inherent equitable
powers. Fees Award at *11. The district court reasonably
found Realtime’s conduct in the California actions “im-
proper,” “exceptional,” and “totally unjustified.” Id. at *6.
When Realtime renewed its lawsuit in California, Realtime
had in hand: (1) the Delaware magistrate judge’s report
recommending the court find that claims of four asserted
patents were ineligible under § 101, (2) the Delaware
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10 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
judge’s ruling in parallel actions that five related patents
(that Realtime claimed helped its cause) were themselves
patent-ineligible, and (3) Patent Trial and Appeal Board
decisions instituting inter partes review proceedings, indi-
cating that Netflix had demonstrated a reasonable likeli-
hood of success in proving at least one claim of each patent
unpatentable. Id. The district court also noted that
Realtime knew, upon filing the California actions, that the
Central District of California had recently “reached a more
favorable ruling regarding the patent eligibility of [the
same four patents] in another case.” Id. at *7. Realtime
undoubtedly realized that by refiling in California, it could
effectively erase the Delaware magistrate judge’s fulsome
and compelling patent-ineligibility analysis and findings.
In addition to Realtime’s efforts to avoid an adverse pa-
tent-eligibility determination, Realtime also resisted
transfer back to the forum it originally chose. Contrary to
earlier arguments that litigation should remain in Dela-
ware because litigating in California would be inconven-
ient, id., and, in fact, “unfair,” J.A. 3813–14, Realtime
refiled in California. It then fought transfer back to Dela-
ware, arguing that relevant witnesses and evidence are in
California and that Delaware would not be more conven-
ient. J.A. 3365–68. Realtime also argued that judicial
economy weighed against transfer back to Delaware de-
spite that district court’s experience with, and now-wasted
substantive analysis of, the asserted patents.
J.A. 3369–70; see also Fees Award at *8. The district court
correctly highlighted these contradictions to support a find-
ing of “impermissible forum shopping.”
Ultimately, Realtime was aware “that its lawsuit in
Delaware was undeniably tanking,” making its decision to
“run off to another jurisdiction in hopes of getting a more
favorable forum [] totally unjustified,” and “improper.”
Fees Award at *6–7.
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REALTIME ADAPTIVE STREAMING v. NETFLIX, INC. 11
The district court therefore reasonably concluded that
“Realtime’s conduct in forum shopping its dispute supports
invocation” of its equitable powers. Id. In so finding, the
district court compared this case to persuasive authority
from the District Court for the District of Columbia. Ap-
plying a “bad faith” standard similar to that required in the
Ninth Circuit, that court awarded attorneys’ fees pursuant
to its inherent powers because the plaintiff engaged in sim-
ilarly “blatant forum-shopping” by refiling the suit in a dif-
ferent forum after it lost and then resisting transfer back
to the original court to avoid an adverse result. Id. (citing
John Akridge Co. v. Travelers Cos., 944 F. Supp. 33, 34
(D.D.C. 1996), aff’d Nos. 95-7237, 95-7262, 96-7136, 96-
7254, 1997 WL 411654 (D.C. Cir. June 30, 1997)).
The district court also considered and properly rejected
Realtime’s purported justifications for its near-immediate
refiling maneuver. First, the district court correctly found
that a then-recent Federal Circuit § 101 decision did not
justify Realtime’s decision to dismiss the Delaware action
and refile in California. Id. Second, the district court rea-
sonably found that Realtime’s alleged interest in a “speed-
ier decision” was “nonsensical” because it moved the case
from a forum where the litigation was underway, and as-
signed to a judge familiar with related patents, to a court
both unfamiliar with the case and “severely understaffed.”
Id. at *7 n.12.
Instead, the facts indicated Realtime only changed
course following the adverse patentability decision from
the same Delaware judge in parallel actions, an indicator
the judge was likely to adopt the magistrate’s detailed
analysis in this case. Id. at *7. The district court found
that the timing made it “abundantly clear that Realtime
had been holding out for a favorable decision” in the paral-
lel action, but then “realized the writing was on the wall”
following that adverse decision. Id.
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12 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
While we agree with Realtime that it is generally per-
missible under Rule 41(a)(1)(A)(i) for a plaintiff to volun-
tarily dismiss an action and refile the case in another
forum, that is a woefully incomplete description of the cir-
cumstances of this case. As described above, Realtime’s
conduct does not amount to simply refiling; as the district
court found, it is a misuse of the ability to refile to wipe the
slate clean when the Delaware action was on the eve of is-
suing a potentially adverse merits ruling, and then select a
new forum that clashed with Realtime’s prior litigation po-
sition.
Accordingly, there is nothing erroneous about the con-
clusion that Realtime “impermissibly” and “unjustifi[ably]”
engaged in forum-shopping in attempt to avoid or delay an
adverse ruling. Id. at *6–7. The blatant gamesmanship
presented by the facts of this case constitutes a willful ac-
tion for an improper purpose, tantamount to bad faith, and
therefore within the bounds of activities sanctionable un-
der a court’s inherent power in view of the Ninth Circuit’s
standard. Identifying no legal error or clearly erroneous
fact findings, we hold that the district court did not abuse
its discretion in awarding fees pursuant to its inherent eq-
uitable powers.
B
Netflix cross-appeals, arguing that the district court
erred by declining to award fees in the related Delaware
and inter partes review proceedings. Just as with a district
court’s decision to award attorneys’ fees, we also review the
district court’s decision not to award fees for abuse of dis-
cretion and nothing obligates the district court to award
fees in related actions. Munchkin, Inc. v. Luv n’ Care, Ltd.,
960 F.3d 1373, 1380 n.2 (Fed. Cir. 2020) (declining to reach
the question of “whether in the circumstances of this case
§ 285 permits recovery of attorney’s fees for parallel
USPTO proceedings”) (emphasis added); Monolithic Power
Sys., Inc. v. O2 Micro Int’l Ltd., 726 F.3d 1359, 1369–70
Case: 21-1484 Document: 76 Page: 13 Filed: 07/27/2022
REALTIME ADAPTIVE STREAMING v. NETFLIX, INC. 13
(Fed. Cir. 2013) (finding that the district court did not
abuse its discretion in awarding fees for a related ITC ac-
tion); PPG Indus., Inc. v. Celanese Polymer Specialties Co.,
840 F.2d 1565, 1569 (Fed. Cir. 1988) (recognizing the dis-
trict court’s “broad discretion in calculating the amount of
fees” although reversing the trial court’s denial of fees for
related reissue proceedings because it held that the “entire
work product was necessary to the case”). Here, the district
court’s fact findings support differentiating the related pro-
ceedings.
The district court concluded that there was no evidence
that the initial filing of the 2017 Delaware action was “un-
tenable.” Fees Award at *6. At that point in time, none of
the adverse rulings had occurred and there was no indica-
tion that “Realtime knew or should have known about the
weakness of its claims.” Id. at *6, *9. Although the peti-
tions for inter partes review were instituted during the pen-
dency of the Delaware action, the district court found it did
not have sufficient evidence to determine whether institu-
tion alone “should have served to apprise Realtime of the
futility of its litigation efforts.” Id. at *9. And, Realtime
had not yet engaged in its forum-shopping ploy that formed
the basis for a fees award in the California actions. Id.
at *10. Accordingly, the district court declined to award
fees for the 2017 Delaware action and the inter partes re-
view proceedings Netflix filed in response to that action.
Because we hold that the district court did not abuse
its discretion in declining to award attorneys’ fees for the
related actions, we need not address the hypothetical of
whether such an award would be authorized under either
§ 285 or Federal Rule of Civil Procedure 41. The district
court explicitly found that “[e]ven assuming that it is
within [its] discretion [to award fees for the related ac-
tions], [it] finds that such an award is not warranted here.”
Id. at *10. We affirm the district court’s decision on that
independent ground.
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14 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
CONCLUSION
We have considered parties’ remaining arguments and
do not find them persuasive. In view of the foregoing, we
affirm the district court’s award of attorneys’ fees for both
California actions and denial of fees for the related Dela-
ware action and inter partes review proceedings.
AFFIRMED
COSTS
No costs.
Case: 21-1484 Document: 76 Page: 15 Filed: 07/27/2022
United States Court of Appeals
for the Federal Circuit
______________________
REALTIME ADAPTIVE STREAMING LLC,
Plaintiff-Appellant
v.
NETFLIX, INC., NETFLIX STREAMING SERVICES,
INC.,
Defendants-Cross-Appellants
______________________
2021-1484, 2021-1485, 2021-1518, 2021-1519
______________________
Appeals from the United States District Court for the
Central District of California in Nos. 2:19-cv-06359-GW-
JC, 2:19-cv-06361-GW-JC, Judge George H. Wu.
______________________
REYNA, Circuit Judge, concurring-in-part and dissenting-
in- part.
I concur with the majority’s holding that the district
court did not abuse its discretion in awarding fees under
its inherent powers to sanction. I dissent in part because I
also believe that the district court did not err in determin-
ing that two voluntary dismissals without prejudice is suf-
ficient to confer prevailing party status under 35 U.S.C.
§285.
It is undisputed that at least some claims were brought
in both the Delaware and Central District of California ac-
tions. It is also undisputed that those claims were volun-
tarily dismissed under Federal Rule of Civil Procedure
Case: 21-1484 Document: 76 Page: 16 Filed: 07/27/2022
2 REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.
41(a)(1)(A)(i) by Appellant in both actions. Pursuant to
Rule 41(a)(1)(B), and as a matter of law, the second volun-
tary dismissal operates as an adjudication on the merits.
Such an adjudication undeniably changes the legal rela-
tionship of the parties, even if the full scope of any result-
ing claim preclusion is not determined until a third action
is filed.
The case law requiring a judicially sanctioned change
in the relationship is in place to contrast situations in
which the legal relationship between the parties changes
due to circumstances independent of the judicial process,
for example, if one party dies, or the parties reach a settle-
ment. Here, the change in the legal relationship is by and
through the rules of the court. And, here, the change in the
legal relationship, i.e., an adjudication on the merits, is a
result of judicial imprimatur. Interpreting our case law to
require an affirmative order or act by the court puts form
over substance. As such, I would hold that a second volun-
tary dismissal of the same claims is sufficient to confer pre-
vailing party status on the nonmoving party.